class-phpmailer.php problem with function EncodeHeader

Hello.
I’ve recently installed a new wp website (Hebrew language).
However I’ve encountered a problem with new user registration, the users never received the email from the system.
After checking with my host and making sure that a simple php mail script is being sent I’ve tried to debug the code and ended up in class-phpmailer.php on

$rt = @mail($to, $this->EncodeHeader($this->SecureHeader($this->Subject)), $body, $header, $params);

when removing the EncodeHeader the mail is sent properly. I’ve tried to debug this further but couldn’t figure out the exact problem.
It seems that the EncodeHeader function breaks the headers and the mail function fail sending the email.
I’ve seen this error repeating on several post as “could not instantiate mail function”. the users are usually guided to use smtp instead of php mail.